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Liability Risk Retention Act needs update: NRRA to Federal Insurance Office


WASHINGTON—The National Risk Retention Assn. said Wednesday that it has advised the Federal Insurance Office that modernization of the Liability Risk Retention Act of 1986 is necessary to stop states from interfering with the operations of risk retention groups.

In a letter to Michael McRaith, director of the FIO, Robert H. Myers Jr., the NRRA’s general counsel, cited numerous cases of states encroaching on the authority given to RRGs under the LRRA to operate nationally when licensed in a single state.

“Even though the law may be relatively clear, there is no immediate remedy for RRGs against state regulators for failure to obey it,” wrote Mr. Myers, managing partner of the Washington office and co-chair of the insurance and reinsurance practice at Morris, Manning & Martin L.L.P.

Court too costly for many RRGs

In the letter, Mr. Myers told the FIO that in the absence of an enforcement mechanism, RRGs must seek relief from such state actions in federal courts, a process many RRGs can’t afford.

The NRRA has endorsed legislation introduced in the U.S. House of Representatives, H.R. 2126, that would establish a federal dispute resolution mechanism, allow RRGs to write commercial property insurance and establish uniform corporate governance standards for RRGs.